Page last updated at 08:54 GMT, Thursday, 29 October 2009
Guide to where power lies

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Business and economy


In the annual Budget speech, the chancellor announces tax rates and divvies up the takings according to the government's spending priorities - including how much to distribute to the nations and regions of the UK.

The government needs to secure the approval of Parliament for its Budget, although it is extremely rare for MPs to reject, or even amend, the government's plans.

UK monetary policy, once the preserve of ministers, is now set independently by the Bank of England. But the Bank works to inflation targets set by the government - and if the governor's policy fails to deliver, he must send the chancellor a letter explaining why.

Parliament retains power over UK business law throughout the UK, including competition policy, consumer protection, regulation of the post office and of financial institutions such as banks.

It also legislates for the whole of the UK on the minimum wage. But for every other aspect of employment law - including health and safety, and legislation to safeguard the rights of women, ethnic minorities and disabled people - MPs are only responsible for England, Wales and Scotland since these policy areas are devolved in Northern Ireland.

Tax rates set in Westminster apply throughout the UK, but Holyrood has the power to alter income tax rates in Scotland by up to 3p in the pound.


Westminster is responsible for the wider economy, but Holyrood agrees a separate Budget for Scotland to cover all devolved areas, based on the three-year settlement received from the Treasury under the Barnett funding formula.

It also sets inward investment and job creation goals for Scotland.

Scottish ministers oversee main economic development agencies - Scottish Enterprise, Highlands and Islands Enterprise - and the voluntary sector.

Tax is largely an issue for the Westminster government, but Holyrood has powers to vary income tax by 3p above or below UK rate. This has not been used since the Scottish Parliament came into being in 1999.

Scotland has responsibility for administering European Structural Funds.


Northern Ireland's overall budget is dependent on decisions made in Westminster, but Stormont controls how it spends these funds on devolved areas like economic development and promoting inward investment and exports.

Stormont is responsible for employment law in Northern Ireland - including statutory protection against discrimination on the basis of gender, race or religion - except for the national minimum wage, which is set by Westminster for the whole of the UK.


The Welsh Assembly has limited control over certain aspects of economic development in Wales, aiming to support local businesses by promoting investment in Wales, improving infrastructure, and facilitating exports.

Although overall funding is determined in Westminster, the Assembly agrees a budget each year to allocate funds on the devolved matters that make up its spending priorities.

The Welsh European Funding Office, an arm of the Department for the Economy and Transport, administers EU structural funding.


The European Parliament (EP) scrutinises, amends and passes legislation on the internal market.

It has voted to remove barriers to free movement of goods, services, people and capital, and aims to bring about more liberalisation of markets for transport, telecommunications, electricity, gas, and postal services.

The EP has passed legislation on the harmonisation of company law, modernisation of public procurement and protection of intellectual property. Technical specifications for goods have been harmonised.

The EU budget cannot be passed without the approval of the EP, so it has power over the allocation of funds to priorities or programmes supporting projects in member states, for example the Regional Development Fund.

Under the Lisbon Treaty, MEPs have increased powers over the application of structural funds, which is money given to poorer regions of the EU.

Finally, the EP can now pass specific laws on monetary policy with regards to measures necessary for the use of the Euro.

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